Brookfield looks to exploit market chaos with US$119 billion war chest

Bruce Flatt, chief executive of Brookfield Assest Management Inc., speaks during a Bloomberg Television interview at the Milken Institute Global Conference in Beverly Hills on April 29, 2019. Photo by Patrick T. Fallon/Bloomberg

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Brookfield Asset Management said it plans to take advantage of the recent volatility in global markets by deploying some of its US$119 billion of uncalled capital to pick up high-quality assets.

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“We are well-positioned and fully intend to capitalize opportunistically on market dislocations,” chief executive Bruce Flatt and President Connor Teskey said in a letter to investors Tuesday, when Brookfield reported first-quarter results.

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The recent market pullback is also creating opportunities in credit, “where private market strategies are playing an even more meaningful role and generating opportunities to provide liquidity when there is less available,” they said.

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In February, Brookfield completed the final close for its opportunistic credit flagship fund, raising a total of US$16 billion through its Oaktree Capital Management franchise.

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Distributable earnings for the first quarter rose 20 per cent from a year earlier to US$654 million, or 40 cents U.S. a share, matching the average estimate of analysts surveyed by Bloomberg. Fee-bearing capital climbed 20 per cent to US$549 billion.

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Brookfield, which manages more than US$1 trillion, raised US$25 billion during the quarter, including US$14 billion through its credit funds. The firm’s flagship real estate fund amassed US$5.9 billion, bringing its total to about US$16 billion.

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Since the asset manager was spun from its Toronto-based parent, Brookfield Corp., it has invested more than US$1.4 billion in three new partnerships and increased its ownership of Oaktree to 74 per cent, according to the letter.

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Looking ahead, the firm sees a “compelling opportunity” to increase its ownership in these managers, which could add more than US$250 million to fee-related earnings over the next five years, Flatt and Teskey said.

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Last month, Brookfield said it agreed to buy a majority stake in Angel Oak Cos., a mortgage lender and investor that manages more than US$18 billion. And last year, the asset manager struck a partnership with Castlelake, giving it a majority share of the private debt firm’s fee-related earnings.

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Other first-quarter highlights:

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